I recently moved into a new house and was contemplating going with satellite television, instead of traditional cable. I had never had this service, so I sought recommendations from my coworkers and my social networks about two satellite TV service providers. A few recommendations for company #1 rolled in saying they loved the service. (and yes, even using the word “loved”—which is a strong endorsement in my book) Unexpectedly, about double the amount came in warning me to stay away from company #2. The complaints about company #2 were all targeted at installation or service repair visits. A couple of the complaints specifically noted that company #2 sub-contracts these services. If you’re part of company #2, it should create pause that the biggest reason people tried to dissuade a prospective customer from your product or service isn’t even related to your actual core service offering, access to a wide array of programing for a monthly price but for the distribution and servicing. Distribution and servicing for which you don’t directly control the systems, process, or customer interactions.
This experience coincided with some reflecting on themes I’ve encountered in my work with product and service ecosystems over the past few years. In reviewing my work, and the work I get exposed to from colleagues through my workshops and talks, I started to recognize common elements that influence how an end-user or customer experiences a service across time and space. Analyzing service journeys one of the biggest areas of end-user pain points or expectation gaps are where a third-party service is involved. It’s the area of the journey that, logically, seems like you have the least control over. Yet it’s one of the more salient areas of pain points and expectation gaps in your service.
E-commerce relies on shipping services; home services—from cable and satellite television to even solar energy installation—often rely on third-parties for installation and repair; Uber insures drivers; AirBnB now offers cleaning services through a partner; when you apply for life insurance a third-party nurse or doctor comes to your house to get your vitals. Car dealerships need to connect with financing and insurance to complete a sale. Mortgages, health care, air travel are essentially journeys made up of a collection of a few dozen, even hundreds of services or products.
The best way to think about this is like a dropped baton in a relay race: when you expect another company—not as accountable to your end-user as you (hopefully) are—to pick up the experience from your hand off. Services along the journey that are out of your control and aren’t a part of your core service will nonetheless influence how your service, your brand, is perceived and judged. When a package doesn’t come as expected, it’s Amazon that’s broken the promise to deliver the package, not UPS or Fedex.
Typically services are outsourced by third-parties for a combination of three reasons:
– Cost reduction
– Expertise that the company doesn’t have (or doesn’t think it should include as part of their value proposition)
– Scale (logistics, capital costs) that you aren’t able to invest in building
One of the problems of an outsourced service is that the main measurement of success is usually cost benefit related, and rarely related to the quality of the customer’s experience.
Companies that depend on third-party services as part of their service journey should look at one of three following strategies. If you aren’t thinking about one of these strategies, there will likely be glaring gaps in service expectations and delivery. All require various levels of effort, time, resources, and commitment at the organizational level. But if you want to improve the whole journey that a customer goes on with your service, you’d be wise to start thinking about one of these strategies. You may not feel you can affect change at this level, but making the case for your organization to focus on these third-party services is a good fight to fight.
1. Vertically Integrate: Own the Service
This is the most obvious one, and the hardest. It requires a certain amount of scale, money, and commitment for an organization to make this happen. But the best way to ensure that a baton isn’t dropped is to eliminate the need to pass the baton at all.
The best way to ensure that a baton isn’t dropped is to eliminate the need to pass the baton at all.
I recently worked with a solar energy company to help them improve their retail experience for selling home solar energy. They used to outsource all their installation and repairs but eventually bought their largest third party installer of solar panels so they could better control the customer experience of adding solar energy to their home—possibly the most critical touchpoint in the whole journey, and an area important for differentiation. They still have to outsource some of the installation, but their goal is to eventually own the whole vertical experience.
As mentioned before, Amazon.com is dependent on other services to get goods to their customers. But if they can, they’ll own as much of the experience as possible.
USAA in financial services, and Zappos in retail are renowned for their great customer service over the phone—both of which keep this capability in-house and dedicate a great amount of resources to ensure that these customer service calls are differentiating experiences.
2. Tightly Integrate Systems
The more integrated the systems of each company, the more seamless you can make it feel along the journey. Any service journey that requires some action to be scheduled at a later date is a good candidate for this strategy. In working with a financial institution that wanted to improve the rate at which customers completed the application process to obtain life insurance, we noted one of the largest drop-offs in the funnel was leaving the scheduling of a follow-up in-home doctor’s appointment either to the customer, or to a third party scheduling service who would call the customer. It wasn’t that the end-user didn’t want to follow-up, but once they were logged off the site, or hung-up the phone with the customer service rep, it became just another one of those things you need to get done at some point in the future. Doing the scheduling while still engaged with the application channel (whether customer service rep or directly on website) greatly increases the completion, and feels more seamless to the end-user. It’s perceived as part of the service, not a hand-off to a third party.
Invest in integrating services so that the different touchpoints in the journey feel more connected from one to the other.
3. Have The Same Customer Standards
One problem with typical third-party services is that they don’t directly receive the brunt of customer dissatisfaction, and in fact are most likely measured on the cost savings they provide. Thus, they may not feel the same sense of mission for customer satisfaction as your company.
Applying pressure to have the same standards, promised to your customers is powerful. Your company needs to make it a priority to include this in negotiations (not just price and efficiency), and create mechanisms to hold them to the standards delivered with your service. If you’re going to pass the baton, make sure the other runner is as committed to winning the race as you are.
There needs to be explicit success measurements on customer satisfaction from third-party services. And your company must be dedicated to actually holding them to these qualitative metrics.
All of these strategies require a commitment, resources and true organizational effort to implement. But if your company has a mandate to differentiate through end-user experience then third-party services—the parts of the experience you have the least control over—need to become an area of priority.
If you feel you can’t affect change at that level, that you can only influence changes at certain front-line product or service touchpoints, you can still improve experiences around third-party products or services. Your fallback is to do as much as possible designing your touchpoints—web, phone, marketing, etc.—to set expectations. Be transparent about where the baton is handed off, and communicate to the end-user what to expect. Basically, hold their hand through their experience within the parts that you control. If something does go wrong, they’ll know that you were looking after their best interest, even if a part of the experience couldn’t deliver on expectations.
Not surprisingly, I ended up going with company #1 for my satellite service. Everything about the installer that came to the house represented the brand (truck, attire, etc.). The installer was polite and thorough. He walked me through the different pros and cons of placing equipment in different areas in detail. He patiently walked me through the system, how it worked, labeled each of my three identical remotes with their corresponding room (bedroom, bedroom 2, living room), and generally made sure I was left with all my questions answered. I couldn’t say whether this installer worked directly for the company or was subcontracted, though I’ve learned that this company does have the majority, though not all, of it’s installers as direct employees. The important thing, as a customer, was that I couldn’t tell either way.